tv Power Lunch CNBC September 30, 2009 12:00pm-2:00pm EDT
you can check out more on the blog. brings up the question, if you can have breathalyzer switches, why not allow people's parents to jam the signals of the driver. >> i've seen the technology so that weem can't be on blackberries while in meeting. it seems what you want to do in our car, you should be able to do. there's that libertarian in you. if you're not hurting other people. >> it's against the law. the s.e.c. rule is you can't jam signals in the u.s. that said, a lot of people are looking at this saying, this makes sense. >> interesting. >> and if you can save lives, that would be a good thing. that's it for "the call." >> thanks for watching, everyone. coming back for the kudlow report. we have two special interviews tonight. john boehner and she's trying to
become the next governor of texas. senator kay bailey hutchinson. right now, "power lunch" is up next. stocks ending in losses. best buy's ceo says he expects the retailer to hire more holiday workers this year than last. atlanta fed president says the fed will eventually have to remove the monetary stance, but the time has not yet arrived. welcome to "power lunch." we will attempt for the next two hours, not to be texting while hosting. even though it's not illegal. >> what about tweeting though?
>> may be allowed. welcome. stocks have been moving lower this final day of the month and of the quarter. the dow tumbling its biggest decline now since the beginning of september. we have four dow components higher. president obama announcing a $5 billion plan to create new jobs. we will speak with vice president's adviser about the plan. "new york times" is meeting with executives today as they face big challenges. what are they going to decide? we might hear today. media and money, coming up. call him the billion dollar man. tiger woods striking the billion dollar mark in earnings. here's what else is on the menu. i'm steve liesman in
washington at the open committee market meeting. i'll have headlines for you from the fed chairman. does he agree that fed tightening could come stronger, faster and sooner than many of us think. 95% of u.s. corporations had plans bracing for flu season as the companies that make the masks that could help prevent the spread of the virus, they are working all out, 24/7. i'll have that story. toyota is recalling 3.8 million vehicles. the largest in the company's history here in the u.s. how much will this recall toyota's sterling safety reputation? let's get to the market action on this last day of the quarter. stocks are down after the latest read on the manufacturing sector. however, dow and the s&p 500
still on track for their best quarterly gains in more than a decade. bob pisani is at the new york stock exchange. >> that's the important point here. we had a disappointing pmi out, but we're off of lows here and it's tough to keep the market down. the last day of the quarter. 15.3% gain in the s&p. best show in 11 years. also, we've got oil coming off the lows in the middle of the day. financials lead early on. a lot of financial names are well off the bottom. keycorp, a number of financial names moving up in positive territory. same situation with the medal stocks. we saw the dollar rallying, then commodities started to move up. that's what i'm talking about. there has been news out.
consumer discretionary stocks were week. darden wasn't quite what people anticipated. they own red lobster and olive garden. also, homebuilders. we've gotten numbers from mortgage applications that are on a weak side. mortgage rates are down, so applications should be up, but they are at seven-week lows. brian shactman, how are we looking at the nasdaq? >> down about a half a percent, but i'll put up a chart. shows you what happened after the pmi chart came out. maybe in the second half of the day, we'll be in positive territory. dell up, research in motion up for the second day in a row. cisco is the best performer of the dow 30. chips, another sector that are
outperforming. applied materials to the upside. all the big name rs not up. oracle down 1.2%. ebay down 2.5% and google, again seeing resistance at 500. finally, i want to close with two calls on regional banks. first, i want to talk about hudson city. also want to talk about had a couple of calls on both sides here, but there have been two good calls on huntington bank shares. this one initiated outperformed with a $58 price target. >> we're not going to talk about stocks or the dollar and their impact on oil. we're going to talk about fundamentals and geopolitics. more than $2 a buck. $69 a barrel here. nice rally after we got the
report from the energy department showing that gasoline supplies fell. in fact, it is gasoline that is really leading this market higher today. we have gasoline demand which is picked up a little bit. we have a decline in supplies and how did that happen? we saw refinery runs being cut. down 1%. this pick-up in demand is not the only reason we're seeing a rally in oil prices. a lot of traders are also looking ahead to talks in geneva tomorrow. in the options pick, we are seeing interesting call activity. november, $80 calls. we're also seeing calls for 2015 at the $500 stock price. lenders are doing more to
help, but loans are rising higher. close to 2/3 of all first time loans in the u.s. diana olick has the details. >> the report shows total loans past due reaching a new high of 11.4%. in q2, seriously di lean quent loans rose to nearly 2 million. this as servicers implemented 440,000 new home retention actions in the quarter. that doesn't look like a lot, but it's up 22%. and remember, please, the administration's mortgage bailout program started in the second quarter of this year. now, pay option arm. these are the loans where you choose what you want to pay for a while. only 70% of those loans are performing with 25% in
foreclosure. to the redefault rate. even on loans that reduce payments by 20% or more, 1/3 are redefaulting after the year. big surprise. that's the bad news. the good news is that the share of mods at reduced payment is way up. why do i care about these numbers? because delooengs are rising higher than modificationmodifich is put more pressure on the government's housing bailout. just a short while ago, the president announced that $5 billion in stimulus will go to the national institute of health to create jobs and support research in the quest for cures of cancer and other diseases. joining us now, the chief economist to vice president joe biden.
welcome back. nice to have you. as we mentioned, this is part of the economic stimulus plan and it will go to not only the race to cure cancer, but autism and other diseases. how soon do you think you will see some concrete evidence of jobs being created in progress? >> i think it's going to be very soon. there are 12,000 research projects that have been awarded already. so they're just about ready to get started to go up and running. this is an area where in the infrastructure, the medical, biomedical research infrastructure is solidly in place. we think we're going to start creating direct jobs right away. but there's a whole indirect set that will come out of this having to do with supplying those labs. building those structures, so you really get a significant multiplier affect out of this as well. >> we miss you over here as a
cnbc contributor. an adviser to president obama, he's advocating a consumption tax here in the united states. are you going to tell the white house that's a good idea or bad idea? >> when i read that, i thought maybe we should have a tax on people who suggest value added tax because about every other day, somebody comes up with this idea. the president has been very, very clear on this point. we are not going to introduce any new taxes for households below $250,000. the economists are often suggesting of that are value added taxes a way to help enhance revenue. there's lots of good attributes to that, but it's a major restructuring. >> both tim geithner and larry summers refused to rule out an
increase on taxes to the middle class. are they wrong? >> that was weeks ago on a sunday show and as robert gibbs made it clear in the following days, they were talking very broadly about the revenue situation over the long-term. we remain, with american families struggling with the toughest downturn since the great depression. jobs, incomes and wages, we're far from out of the woods. no tax changes. >> let me ask you this then. a question we've been asking a lot lately and you guys are probably pondering it a lot. when do the training wheels start to come off? we just heard the foreclosure numbers. cash for clunkers came and went. the fed is still buying up treasuries. when do you sense it's time to
start pulling back on stimulus? >> i don't think there is a fixed point in time. i can't tell you that on october 23rd, everything comes off. what you need to do is phase out government support as the private sector gets back on its feet. >> we're not there yet. >> not there yet. you want to avoid the big kenzian air pocket. that's something that will hurt the economy. remember, the recovery act is really about maybe 40 to 50% spent out so far. if you look at the obligations of the tax cuts. there's a lot more to come and we're going to need it. >> this morning, when we thought the second quarter gdp growth was down, is that going to relieve pressure for second stimulus? >> again, there's no talk of a second stimulus. as i mentioned, at least half of the recovery act still hass to work its way through the system
and will throughout much of next year, so we have to see how that unfolds. whether it comes to first time home buyers, we're going to work with the congress to evaluate the need for extending the programs. >> rule it out. >> thank you. >> rule it out. just say, no, we're not going to do it no matter what. >> i didn't know what i was thinking. it was earlier in the summer. he corrected me. >> time flies. it seems like it was just yesterday, right? we'll take a break, come back. we're at the end of the quarter, the month. what's ahead for those markets? our task force set to drill down on the big thing investors need to focus on in october. plus, preparing for the swine flu season. the big steps u.s. firms are taking to combat that. plus, toyota announcing a massive recall. sticking with the car details here, a summit underway on
for the month. chief operating officer of tenant coming up here on "power lunch." now that september's almost in the books, turned out to be a pretty darn good month for the stock market. let's look ahead to october. what's the big thing investors need to be watching for next month? let's gather our tasks force and talk about that. good to see you both. both of you happen to believe it's earnings that will set the tone for october. bob, what are you expecting? >> i think earnings are going to continue to beat expectations. we had a very good season coming out of the second quarter into july and i think we're going to go through the same pattern. we have seen earnings estimates increase, but i don't think they're keeping up with the actually numbers we'll see in the next couple of weeks.
>> david? >> i'd say we're maybe a bit more cautious. we're not letting our clients get lulled into a false sense of security. with earnings, i would also employment. a deteriorating employment environment would off set the positives. >> if you are more cautious and don't want your clients to get quote, unquote, lulled in, how are you -- >> let's say the growth oriented client, we might have that person in 70 or 65% in equities. on the higher quality side mostly on fixed income, then when you talk about the longer term impact of the recovery, when it comes or comes full speed, then we'll have the issue of inflation and asset allocation should be geared to hedge against that. >> robert, you know, most september stocks fall 1.5%.
by yesterday, stocks were up 2.5, 3%. is october going to be a lousy month? >> i think the fact the credit spreads have been driving the stock market. investors have put a lot of money into bond funds this year. the first part of september, we saw a lot of money coming into the bond market. credit spreads have been compressed. i think that in the last week and a half to two weeks, we have seen credit spreads widen a little bit. i think investors have lost a little bit of their appetite for the riskier sides of the credit market. i think the focus over the next three to four, five, six weeks will be on the earning side. >> what are you telling people when it comes to their asset allocation? >> our recommendation has been to get back to whatever your long range allocations should be. for some people, they're still a
far distance away from being back to the kind of equity allocation where they should be. it's rare where i run into an adviser or client who is in effect fully allocated. >> what's that number in your head when you say fully allocated? >> it depends on people's situations. i think investors heading for the hill and sitting on cash. it's almost 4-1. >> before we let you go, when will the fed become a factor for investors? >> i think the fed always is. the -- we hear a lot of talk about i. clearly, the pullback of the liquidity in the market longer term, that will be the key to the impact for most investors. >> when do you think that will be. >> if it's too soon, it will be painful. if they wait too long, inflation will come back and bite us.
it's on the side of caution and not pulling out too early. >> thank you both for joining us. up next, we've got swine flu preparations picking up. a live report on one publicly held company. plus, still ahead, the billion dollar man. we're talking about tiger woods. yes, he has cracked that money mark. how did he do it and will he reach 2 billion before he hangs it up? ♪
hartford financial. and we'll be talking to a gentleman from tenet about their swine flu preparations. a lot of american companies gearing up for the swine flu season. bertha coombs is on the ground in salt lake city, utah, with more on this. >> a lot of companies have made preparations. they're bracing for the onset of flu season, but mass makers like this one in salt lake city, have been working around the clock already trying to keep up with the demand for these masks. in the second quarter, the demand for masks here was up 200%. as we close out the third quarter today, they say they have mass orders well into the new year. the reason is because these masks screen out more particles that are smaller than the virus, so they're in high demand for
health professionals and they're seeing a lot of demand. 3m is a bigger manufacturer that has also ramped up its demand. they have added capacity as well. they've added $20 million by 10%, but said the sars outbreak in 2006 -- by 40%. the issue they say right now is that they expect to continue this pace for all the mask makers well beyond flu season. >> from everything we've read and heard and studies on the h1n1, i believe it's coming through its phases. we're looking probably at two to five years and i would imagine we're going to run at this pace of manufacturing for two more years. >> as i mentioned, 3m is the biggest producer here in the u.s. and they, too, are producing 24 hours a day.
kimberly clark also produces masks. they've said they've also seen a big demand. the two things that will difficult for these firms are one, to try to get enough materials to be able to ramp up production and two, trying to make sure they have enough people to work as a lot of folks come down with the flu. >> tell us again or elaborate on what makes the n95 version respirator so unique and valuable. >> the thing about them is that they fit the health officials around the world say that for health workers and dealing with sick people, they need to have a respirator that helps them block out across their face. these come and they fit tightly around your face and because of the filtering process, block out about 95% of particles that are
even smaller than the virus. they fit much better than your typical mask and work up to eight times better. >> bring some home. >> there's a job for mike brooks. dirty jobs right there. toyota's troubles. the automaker announcing a major recall. 3.8 million vehicles, all as a summit gets underway to prevent cell phone use and texting and driving. and get ready for the "fast money halftime report." >> tough end to the third quarter. where are we headed in the fourth? we'll hit the charts and see what the technical take is for the markets. also, why you might want to be bearish about energy. all that and much more on the halftime report, but first, more "power lunch" right after this.
toyota announcing a major recall calling back millions of cars because of problems with floor mats getting stuck under the accelerator. phil lebeau joins us from chicago with more. >> 3.8 million vehicles is how large the recall is. it's unclear how much this is going to impact the company's bottom line. the solution so far, throw out the mats. in terms of dollars and fixing this, it's not going to be a lot. you see shares of toyota under a bit of pressure today. those vehicles built between 2004 and 2010. how widespread is the problem of actually vehicles where the accelerator has been stuck by the floor mat? well, the government has reported 100 incidents where the floor mat has been stuck under the gas pedal and it's suspected
in a california crash. you see the wreckage of that crash. here's what it looks like, what causes this accelerator jam, if you will. there you see the floor mat. it gets jammed up against the accelerator. as a result, the car continues to accelerate and cannot slow down. for more on how much this is hurting toyota's reputation, check out the blog on cnbc.com. the largest recall from toyota prior to this one, 900,000 vehicles. this is the company that never has those million plus recalls. now it does though. >> the mat gets stuck under the accelerator, i couldn't push the accelerator down far enough. >> and what happens is that it comes dislodge td. it's supposed to be held down. that's when this is potentially a problem. >> so what about this distracting drivers summit? >> it's going to get a lot of attention in part because the
federal government came out with new statsices today, accidents involving 6,000 drivers. what's interesting here is that for the most part, the government saying ban it all together. you know how this goes. this is much like drinking and driving. you tell people you can't do it, yet they still do it. brings up the question whether we should see cell phone jamming devices in vehicles. they're saying, no, you can't do that. >> over what period of time? >> that was last year according to the d.o.t. the bulk of these are with texting. the concern is with teenagers because that seems to be where the problem is prevalent, but everybody does it.
everybody does it. i have neighbors who say you shouldn't and then they do it. >> you get in the backseat where a driver is driving and texting and suddenly, i'm very against it. >> already huge penalties if you lose control of the car. you have a car accident, you get very, very hard with fines and fees for losing control of the car. >> we've known that. >> thanks. let's go to steve liesman with some breaking news right now. >> it's time, steve. >> thanks very much. donald kohn about to speak and he will say he can't predict how rapidly the fed will have to tighten. the remarks made last week saying they expect the process to be faster and stronger and come sooner. certainly not disagreeing, but
not agreeing with him. the pace of tightening, a lot like other issues. it's going to depend on dmeconoc growth and inflation. he said they will have to tighten before inflation threatens, but that is not anything new. he goes on to say the fed is developing tools to drain reserves. he goes on to say that the special fed lending programs other than institutions things like investment banks, will term when conditions are not longer unusual. he expects spreads on mortgages to tight as the fed purchases go down. if they don't widen enough, the fed could end up selling some of these mortgage-backed securities. the fed will need to be transparent about what will trigger policy, but clearly not enough to warrant any imminent
tightening of policy. he goes on by the way, ends his speech by repeating fed policy that rate wills remain low forren extended period. i would point out he began his comments with those. he said, yes, but. and this is the end, saying this is the policy and judging when and how to exit will be challenging, but not something they'll do imminently. >> all right. thanks, steve. don't move, we're going to discuss that with two economists on the other side of the break. >> the dow is down 47 points. back in a moment.
let's talk about those comments steve liesman just brought us. joining us to do that -- nice to have you, guys. dan, i'm going to start with you. how do you read this and at what point do you think given what you just heard, the feds might start to take back accommodation and move on rates? >> i would agree with steve, that this isn't necessarily anything new. we have a flurry of speakers and it's going to take us time to iron out where the epilepsy as a whole stands. i would simply add that listening to the statements, he shouldn't be treated to the same
degree that perhaps lockhart are. >> but vince, still, when he says he can't predict the return of rising rates, isn't that an acknowledgment? a quarter point, a quarter point, maybe we shouldn't be used to that or expect that this time around? >> the fed was very aggressive in putting in policy accommodations. they want to think they might be willing to be aggressive in moving their policy accommodations. central banks don't tend to be symmetric. policy rates tend to go down quickly and then come up. it's called going down by the l elevator and up by the escalator. not being willing to tie it to any particular number or readings.
>> steve liesman, how much of this new talk of a much tougher fed is going to raise rates, how much is changing our strategy versus trying to shape your expectations out there? we want to work on that part first. >> that's really the problem with kevin's comments. i want to redirect what i said about the statement. i think there is something new in this and he's redirecting back towards the statement and there is a bit of, i don't know if i want to call it a disagreement, when he came forward and said you know what, this could be faster, sooner, stronger than we predicted. he's saying the statement prevails and the statement says low for an extended period. i think there may be a little bit of a division or an attempt by the fed to talk out of both sides of its mouth. also control the long end by
saying, hey, we're out in time. >> idealy, the fed starts to remove the punch bowl in time. >> but that won't be the case. would you rather have them go too soon or too late? >> i would say that's lose-lose. they're going to create problems in the economy. >> which would you rather see? do you fear inflation or a double dip? >> with all do respect, you're going to get one or the other and they're both going to be bad. personally, i'd like to see them tighten. >> we're jumping to conclusions here because the next six months is going to be really, really important. we're speculating about something -- the example of richard fisher in 2005 and rate hikes. >> thanks, guys. >> vince, dan, thanks.
steve, let you get back to that conference. "fast money" coming up next. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.
positive and the s&p 500 off of session lows. let's see what's moving us higher today. donny, sharon, danielle and greg -- one chart -- one chart sticks out in my mind. the chart of goldman sachs versus the s&p 500. the tale of the market today. >> goldman's that way, apple. a proxy for the s&p. i'm surprised the s&p's come back like it has. it is quarter end. maybe people ramping things up as we get to the close. >> we've talked about it before. it's called window dressing. this is the end of the quarter. statements go out so the bulls are really fighting the bears today. even though the numbers have been terrible, they fought it.
we were down this morning i think about 130 points, so we fought that back. >> jared, how is the turn around in the market? >> first of all, the spx touched its 20-day moving average. the other thing we're seeing, a lot of window dressing out there. people just buying stocks. they didn't want to hold it down too far. people actually buying upside calls when the market was down this morning at the open. >> greg, pull out your chart and tell us where we go from here. >> it's really become day-to-day on how we're going to set ourself up heading into the fourth quarter. right now, as i've been mentions, if you look at the moving average line, the trend line in general, everything is bullish. all systems are go. i am short right now based on the key reversal day we had last
week. we have not been able to have price action trade above that level. it really is a fight between the bulls and bears right here, but right now, i have very tight risk on my position and we'll take it day-to-day. >> let's touch on the nasdaq, in positive territory. internet, we're strong. steve, what do you make of what's going on in today's session? is this a rotation happening? >> feels that way. a lot of money came into tech this quarter. i still point that intel that sort of defied logic to me a few weeks ago. that stock topped out about 20.5 and has had trouble breaking 20 ever since. to me, that's the bellwether, that's the tell. lot of the big guys, not great no matter how you slice them. there are some warning signs for
you. people vo got to heed those warnings. >> overall, financials, cit is weighing on the banks. jpmorgan is lower. goldman sachs struggling to go higher. ben hughes, what do you see in the financials here? >> i think there's getting in. we've got numbers coming out fairly shortly in financials. they've been overblown. there is a lot of pullback on names like hbc and some of the other bigger institutional names that have dividends. that's a big warning sign to us i think that we want to stay away from financials right here. we've actually been hedging against financials. >> there's also fundamental things we need to look at here. the fdic may increase their requirements. that could be big cost for wells fargo, citigroup, as well as
jpmorgan. i think everything kind of spells protection here. as we move higher, volume's dried up. yeah, it is the end of the quarter but i'd be careful. we did some recovery of morgan stanley. >> highlight a name you've been touting on the desk for a while, jeffries. making a news move today. upgrade, also raising third quarter estimates on jeffries. up 1.8% at this point. what would you recommend people do if they'd listened to you prior and bought in? >> hopefully they did. we've been on this since it was the low teens. we love what they've been doing there. the problem is $27.50, $28.you scratch your head. as wall street progresses and into new wall street, i think jeffries will be perfectly situated for what's going on.
the problem is i can't say put on a new long position at these levels. can it go to $29? yeah. but i heard john and pete say i think the easy money's been made on these stocks. i think these upgrades are late. hopefully you're selling into this. >> quickly, jeffries, short it? >> i said i would take 30% profits off the table. i didn't say to outright short it. gradually start to take profits here. moving on here today, talk about another item, oil up 3%. gasoline inventory showed a surprising drop this morning among energy stocks moving higher, refiners. joe taranova is on the fast line. joe, what do you do here in this market today? >> happy hump day, melissa. you have to play what institutional money managers are doing, look forward to the fourth quarter. you come in under pressure. you want to be long commodities. you got to be long commodities. simple reason that the policy
will remain in place. we have to leave the training wheels on chicago pmi, durable goods. they are telling you that we are not ready to take those training wheels off just yet. you will see significant pressure under the dollar. that's going to make oil rally, that's going to make gold and copper rally. commodities will be the story of the fourth quarter. >> you bought gold last night in the overnight session. how about oil? >> i bought oil this morning as well. i think you will see some good index fund buying as the first trading day of the month is upon us tomorrow for october. copper looks good. i think all the commodity names again, that's the place to be if you're a money manager in the fourth quarter. >> i think that will weigh a little heavy on stocks, too, if we do have those commodity ral diz into the fourth quarter. >> what happened do you see in terms of the options activity? >> a couple things with energy sector. i like commodities. i like gold, i like oil. to just say go out and buy energy, i don't know if that's a
play. we saw big buying. i agree with joe as to the dollar inflation hedge. for everything else, people are starting to nibble on that protection. be careful there just getting any energy stock that's out there. how can a stock that's up 500% from the bottom be a slow money pick? the chair woman explains why one bank is a hold for the long haul. up next, preparing for the onslaught of swine flu. with stocks sputtering toward the end of the best quarter in ten years, account market take up the slack heading into the fourth? the monster on what stacks will keep the chains moving. break out the purell and sneeze guard. will swine flu be the fourth quarter curveball for this market? plus buy and holds not dead
welcome back to the "fast money" halftime report. let's look at turnaround that seems to be underway on wall street. nasdaq is in positive territory. dow jones industrial average closing in on session highs, now down by less than ten points. the s&p 500 down by just one point. looks like we could turn to the positive at any moment. as we mentioned, the nasdaq helped by strength in the chip sector. it is up by about 6.5%. so given this momentum that we are seeing here, at about 1:00 in the afternoon, let us call the close. do buy eers do at end of close?
>> i'm not bullish but today's impressive. >> in the short-term, if the momentum's there and price action is positive, i'm going bullish. >> danny hughes. >> i'm actually selling. it is the last day of the quarter. i'm waiting for tomorrow. >> i'm wearing it on my sleeve, melissa. i'm short. >> that does it for us here at the halftime report. tonight the fourth quarter curveball that could be good for your pharma trade but bad for everybody else. credit agencies under fire this afternoon. hearings kick off in about an hour. a key lawmaker's plan to set them straight. plus, the coo of a health care company joins us to discuss how his company's preparing for swine flu season. and ideas on how to make money from the web. one media watch's take on the state of the times. tiger woods, the first athlete to rack up more than $1 billion in earnings. who's on his tail. back in a moment.
federal reserve vice chairman donald kohn says policymakers will raise rates well before the economy overheats but he says the recovery will remain subdued for some time. senator majority leader harry reid is canceling the senate's planned recess for next week, instead having lawmakers finish the health care reform bill. yale university economist robert schiller says a housing recovery is underway but adds home prices could stagnate for five years. that's cnbcnews.com news now. welcome to "power lunch" now. the second hour is underway. i'm bill griffeth on this final trading day of the third quarter. boy, the stock market resilient as it has been all month. coming off the lows of the day -- >> positive! >> the nasdaq has been positive, the dow just now turning positive for the first time in this session.
we've got cisco, american express, intel, number of components contributing to this turnaround. we'll see how we go into the afternoon here. federal reserve vice chairman don cohen out with comments that policymakers would raise interest rates well before consumer spending and business investments overheats. is going green the key to save economic revival? governors are gathering at a climate change summit in california. we'll go there live, speak with a special guest. new polls out showing older workers are expressing nerv nervousness over their finances. should those nearing retirement of invest in stocks at all? three credit agencies will be on the hot seat an hour from now. a house subcommittee will be grilling them on transparency and accountability. representative paul kanjorski
joins us. welcome back, sir. the administration has put forth some of their thoughts on house better to regulate the credit rating agencies. you have a draft out there on changes that you'd like to make to those suggestions, big picture. what? tougher? more accountability? more litigation possibilities? how do your ideas differ from the administration? >> well, i think we've taken a tougher position against the rating agencies because, one, we want to get this attention, but, two, to a large extent, they are one of the really identifiable parties in this group that most people feel had a significant impact on what happened to us a year ago, and they sort of failed to make the grade and we had to ask the questions why, and what can we do to change that and to bring them more into a usable entity. and i think our bill has gone toward that and in it we've
included liability, we've made responsibility there, we've put points of supervisory control, things like that, in place that the administration didn't necessarily have. >> my understanding of the biggest conflict of interest, credit ratings are paid by the companies whose debt they're rating instead of credit agencies being paid by the investors that want to buy that debt. i don't think any proposal out there finally says investors have to pay for their research instead of the debt issuer. what do you think of that? >> well, let me give you an analogy. in law, it would analogous to the winner of a litigation to voluntarily offer to pay the judge's salary. i don't think we'd tolerate that, and that's the nature of how big this conflict of interest is. the issue of the securities pays the rater of those securities who they intend to sell to the market. >> you want to end that, sir? >> well, no. >> why not? >> i recognize that it went from a user pay to now an issuer pay
because it was very difficult to get the user to pay a sufficient amount of money to maintain rating agencies -- >> maybe that's a good idea. maybe then the users who really want to know the information will pay for it, and maybe it would get rid of this aabdicati self-responsibility. people don't do their own homework. maybe congress should just get out of bifs completely in dealing with these ratings agencies at all. >> congress isn't in the business. is a completely nonregulated entity. >> it is regulated by the s.e.c. in order to be an nsro, you got to go through this process. >> they have to register. through the act of '06 we changed it from just having three or four nationally statistically rated statistical agencies up to about ten today. but 3 of the 10 monopolize 95%
of the field. so, you know, we really don't have what you call a competitive field, and i believe it's such an inherent conflict of interest to have a payment flowing from the issuer. now i don't think we can remove that in its entirety. >> i don't understand, mr. chairman, why you couldn't remove that. what would be the roadblock to removing it and making it basically a system where if you want to get unbiassed information, you have to pay for it. like you do with stocks. >> nothing would bar us from doing that except most importantly people say it wouldn't be a sufficient amount of money to sustain the expertise necessary at agencies and the expenses, and they would go away, and then we'd be without any entity -- >> then maybe the investors would have to do their homework themselves. >> fine, that's great for institutional investors to have the wherewithall to do that. but there are a lot of small
companies that don't have the capacity or the ability to do rating, with and it's sometimes better to have a professional entity out there providing ratings than absolutely nothing. >> hire a financial planner that does that. >> look, we know a lot of financial planners don't succeed in picking the right -- how do the firemen up in utica, new york decide what securities to buy? right now under the law they say you can only invest your money in aaa securities. then the question is, well, who provides the rating for aaa? and that's where these rating agencies come into play. >> so one way that you're trying to remedy that, i guess, sir is with this liability issue where you would make it easier for the individual investor to sue a ratings agency. obviously you've struck a nerve with the three heads of the agencies because they've already come out before this hearing and said they would oppose that. realistically, wouldn't you be opening a pandora's box by making litigation that much easier for individual investors? >> no. it's really making the pleading
stage easier because in most instances you never get to the level of completing the pleadings because they've built up such a wall of protection from everything from first amendment protection to other protections that are built in for them. what we're trying to do -- look. we're trying to find another means, another way, to get to a satisfactory result. this is a draft of a bill. we're encouraging by putting this bill out there anybody that has an answer or a suggestion to this problem, come forward and tell us about it. we don't have all the knowledge in the world to be able to decide what to do. all i can tell you is almost everybody i have talked to on wall street has said, one of the greatest failings of this system on this recession was the rating agency. >> actually, you gave me the perfect segue, mr. chairman. there are also those on wall street who say that the rating agencies failed so miserably that they are now irrelevant, that basically their reputation is tarnished beyond repair.
after what you've heard today, do you agree with that or do you think that's too far a statement to the left? >> well, no. they do provide a function. their success rate has not been enviable. i think if we tighten things up, show them a new light and give them an opportunity -- there are no guarantees anywhere. but what we're going to try and do is correct this system as best we can. we've had suggestions from some of the most outstanding people on wall street. some suggest to deinstitutionalize the ratings system. others suggest to do it through a quasi governmental function. i can tell you this, i just returned from europe ten days ago. the reason they hold us in disregard is that they felt these rating agencies were speaking for the united states government, and when they put forth aaa ratings, they thought this was rated by the united states government. we can't afford to have that happen again. >> that's right. >> but it has affected us to a great extent and cost us dearly. >> mr. chairman, your hearing
gets under way in less than an hour, thanks for your time today, sir. >> government municipalities that are desperate to keep the ratings agencies because they want to be able to have theirs trade like a commodity and it is much tougher to issue -- >> he wants to have mutual liability standards for each rating agency is responsible for the other's rating. >> holy moly! >> that's disastrous for the trucking industry when they were responsible for laid off truckers under the teamster's contract. a story we'll continue to follow. and a story we've been all over here at cnbc, the swine through and a business roundtable survey released today shows that 95% of companies have business continuity plans in place in the event of the h1n1 crisis. joining us now with their preparedness plan, no, dennis does not have the h1n1 virus -- thank goodness -- dr. steven newman, chief operating officer at tenant health care system.
you're in an interesting position. a number of places where you do business are areas that are going to be considered kind of crisis centers if indeed we do get a swine flu outbreak. tell me what your company's done to prepare itself around its employees. >> well, that's right. we've worked on our preparedness plan all the way since 2005 when the avian flu was felt to potentially be a pandemic. we've educated our employees throughout the united states. we've provided them protective equipment. we have policies, we have procedures, we have drills and all of our caregivers are ready to provide. >> how many cases have you seen? >> well we've seen thousands of cases present into our emergency room for evaluation and treatment. almost all of these patients have been discharged home, in good condition, to be isolated
in their own homes, and to be treated with nonaspirin-containing pain relievers and fever reducers. almost all of these patients have recovered spontaneously, which is the good news. we're hospitalizing less than 3% of the patients we're seeing in our emergency departments across the country. >> does your gut tell you that this is going to ramp up? there are some people who think we will have, and have had, swine flu outbreak but it won't be as severe as just the regular seasonal flu which kills some 20,000 people per year. what do you think about the swine flu versus the seasonal flu statistics? >> at the present time, based on our own corporate statistics, we're seeing admission rates that are slightly less than what we would see in a usual flu season. we are seeing certainly more patients presenting to our
emergency departments because the incidence early in the season is very high. but at the present time, the number of patients being admitted, those going to critical care units and requiring mechanical ventilation is very low. >> if the swine flu is weaker than the regular flu, and the new vaccine, which remember back in the '70s, i could swear the vaccine the government came up with killed more people than the swine flu did -- should the parent of a young child take the risk then of even giving that vaccine to the young child? >> well, my recollection of the last swine flu vaccine is a little different from yours. there was a widespread vaccination. there were several incidences of patients having problems after the vaccination. there was never a cause and effect relationship proven between the vaccine and those events after the vaccination. but to my recollection, very few patients have died from that
vaccine, as there is expectation that very few patients will have serious side effects from this new h1n1. >> parents should worry about it for their kids then. >> well, i think that the pediatric age group is one that's under study right now with the new vaccine. certainly those under the age of 10 may in fact need two injections to be immune. those over 10, probably will become immune with one injection. but, we're using that vaccination in our caregivers at the bedside so that they can stay well and take care of the patients to come in to our emergency departments or admitted to our critical care units. >> dr. newman, thanks very much. appreciate it. >> my pleasure. a bit of a comeback. it's stalled a little bit here but we're watching it. we'll round up our all-stars. give you the pulse on the final trading day of the quarter. account "new york times"
find a way to make money from its online content. we'll discuss that as the paper's chairman meets with his employees today. plus, brokerages. right? >> bracing for a showdown over a topic that charlie gasparino's going to join us in the mix. we'll tell you who. if you're near retirement, should you still be investing in equities? if so, how do do you it? we have debate about that coming up. you're watching cnbc and we are first in business worldwide.
this is an intraday chart of the dow jones industrial average. we have a triple-digit loss almost immediately. but speaking to the resiliency of the month, the last three months, the industrials now in positive territory higher by 20 points. led by american express. these are some of the biggest winners for september. amd, up 32%. wynn resorts, up 3%. sandisk by 24%. let's get to our market reporters, drill down on what's been happening here intraday. bob pisani at the new york stock exchange, what's pushing this market higher? >> first it was the nasdaq that went positive. then the s&p 500. this highlights -- techs led earlier on. look at ibm. it sort of highlights the treacherousness of trading in this market. one trader called me this morning and said it is like trading in the bermuda triangle when you're trading in september
and october because there are so many cross currents. theoretically we should have been able to keep the markets down. we've held on very well for the last month or so with no real correction at all. it is the last day of the month, 15% gain. best gain in almost 11 years in a single quarter here. there is a lot of upward momentum. look at american express financials also did very nicely here. am ex is one of the first to turn green in the middle of the morning. elsewhere, disappointment from the restaurant chains, some big names. denny's flat. p.f. change's, down fractionally. hmos are the exception here. not only do we still have uncertainty on health care reform efforts, but also several companies cutting a whole sector on uncertainty on where enrollment is in the hmos. they're part of the whole health care reform process. all this uncertainty. still they can't get any rally. that's been going on two weeks now.
tradertalk.cnbc.com. turning green spart statarted w group, brian. >> both charts reflect the steady climb. at noon eastern it looked like we were trending back. i do want to point out we still have more decliners than advancers. though tech leadership is clear. yahoo! had their estimates raised, up 1.7%. research in motion two days in a row of gains, 1.1%. cisco the best performer on the dow 30 so far, up 1.8%. intel up .9% but chips in general doing very well today. want to look quickly online retailers. it's a bit of a tale of two companies. ebay up almost 2% but amazon up almost 2%. dollar tree, rbc capital
initiating it at out perform and a $58 price target, up 1.5%. sharon epperson down at the nymex, what's the latest on oil and gold? >> for investors trying to figure out where to put their money for the fourth quarter, pay attention to what's happening with the dollar. the dollar index has weakened further here. bart of the reason we're looking at a nice rally across the board in commodities. dollar index in fact is down about 4% for the quarter. today we're looking at a rally of over 4% for oil prices. oil coming close to that $70 mark, looking like it may want to test that in the next couple of days if that rally persists. gold well over $1,000 an ounce, the best quarterer for gold in six quarters. gasoline numbers today also helping to support that. the geopolitical situation, rick, you got to consider that as well with the geneva talks happening tomorrow between iran and major world powers. that's something that a lot of
commodities traders are watching very carefully, every headline. over to you in chicago. >> sharon, it's interesting about the geopolitics, what's going on in the mideast. course it is fascinating, it's scary. but one would have thought based on how markets used to act, there would have been a lot more horsepower in some of these moves. it really isn't materializing. if you start out at intraday ten-year node yields today, you see quite clearly the rebound of the effects in equities pushed rates a bit higher. but it is not an equitable relationship. on any given day you might gravitate toward that flight to safety reversing on bounces in equities. but every day we seem to play that game from a lower yield level. that's important to remember in terms of the dollar index that you talked about. many traders down here say that it was a combination that they thought a lot of the run in equities was the commodity type stocks, related energy stocks, doing better. michelle, back to you. >> thanks, rick santelli. my favorite breaking news of the
day -- everyone stay with me -- chili's just announcing it is bringing back its famous baby back ribs jingle, ajording to the "wall street journal." part after new ad to tout the sweeter smokey ribs. i cannot sing so i will not. ♪ baby back baby back baby back ♪ >> bring back the alka seltzer jingle. >> chili's on line one. >> bringing back those ribs? >> i like a good jingle. "new york times" executives are going to meet with their employees today at the paper. facing big challenges. especially got to look at how, and whether to charge consumers for its online content. talking media and money. let's look at "times" and some other newspaper publishers and how they've been trading today. very -- lot of red on there. i was going to say mixed bag,
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has a story on this. it is a good one. john, you point out that in the spring the "times" had said they had a decision on whether to charge and how to charge by june. in july they said by august. now they're saying by year end. they just don't know what to do. >> nothing's happened with that. it's interesting, just as you said, bill kel lar, executive editor of the times told his staff back mid-may we're going to figure something out by the end of june. all of a sudden the whole summer trickles by. bill keller told news this week's "new york observer" that a decision hasn't been made. one might not be made before the end of the year. all of a sudden he said it is going to have to be a gut decision. it is going to have to be through the gut. no matter how many spread sheets they look at or how many slide shows they watch, it's got to be a gut call. >> the "wall street journal" started from the get-go at the subscription site and many other print papers now look at that and envy it. but we forget the "journal" brings in a billion in revenue
from the old print. >> from the "times," more than 80% of their total revenue still comes from the printed product. the "wall street journal" is a special case. the "journal" is something where they have specialized content, business stuff, stuff that you guys talk about. "the new york times" is a national product and needs to be read by a bigger audience. it is tougher to get subscriptions off that. >> if you could just convince every other newspaper online to charge at the same time. you'd have it. but with the competition factor it can't be done. who's going to go first, right? >> i don't think so. why can't they use it to their competitive and comparative advantage that their accuracy is better, that they have more people in more places -- >>ly tell you exactly why it won't work. because the constituency that that would need aren't people that are reading online. my kids, younger generations who are reading, have no allegiance at all for any particular publication. they can get the news anywhere they can get it. it doesn't matter if it is "the
new york times," "hartford current" whatever it is. right, john? if you're going to charge for one, they'll go someplace else and get the news anyway. >> it is true. among the kids these days there is an expression, the news will find me. whether it be through twitter or facebook. >> what choices did "the new york times" have here? is it a subscription per month? a subscription per week? why can't they go with the micropayments? >> or articles. >> micropayments, the reason they want to do something like that is they argue it is too cumbersome. which they're probably right about. you don't want to have to sit there and constantly get out your checking book at times when you want to read a story. >> you set up an account. >> here's the thing. do you think it is all or nothing? you either got to be all pay or all free or can we have a hybrid model where you get a lot of stuff free but then if you want behind the velvet rope you pay me a little bit extra? >> that's precisely what the "times" is looking at right now.
they're looking at two different things. one sort of this metered system where all of a sudden you go to nytimes.com, click on a few different articles and a meter clicks on and suddenly you'll start getting charged. the other thing they're looking at is sort of an npr model or pbs model, where essentially you write a check and you get "the new york times" tote bag, you'll get access to special -- >> exactly. >> charge for the by lines that are the most popular for the writers and reporters. >> the more readers you get, the more you can charge for advertising. >> it is a dicey situation for the "times" because the "times," they make -- they argue that they make a lot of money off advertising, additional advertising. if they make more than the "wall street journal" makes off its subscription system for wsj.com -- >> we have to go.
>> thanks so much. you young punk, you. i don't envy bill keller to come one a solution to that. >> they're selling the bonds and buying the stocks. >> the credit market sent me a note that said credit markets look extremely tricky right now. very weak. down a point on the 30-year long bonds. it could end up 4% in september! that's incredible. we'll look at washington in a minute. lawmakers are watching cap-and-trade legislation. the nation's governors are gathering at a summit on climate change. our next guest advises them on how they can boost their state's economy by going green. we'll talk to him live from that summit in a moment. and battle between brokerages which may be about to intensify. involves wheeling and dealing with the top executives. charlie gasparino is hot on the case with the details after this.
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up about 15 points on the trading session. that's come at the cost of the treasury arena where we have a sell-off in the 30-year under way. the 30-year bond, now the yield is 4.05%. for more on today's market, back down to the floor of the new york stock exchange. steve grasso, they're buying stocks. impressive given the start today. >> that's right. technicals, charts don't lie. that's where i thought we'd be quarter end. that's where we are now. let's see if we can hang on for the next couple hours. i thought it was right here. >> the question dennis has been asking analysts lately, with all the gains in september are we taking away from what could happen in october? are we kind of moving it all forward? >> yeah, i think so. but i think october's going to be a stock-specific month. >> because of earnings? >> exactly. earnings are going to be the key. that was the next catalyst. everyone's been waiting on health care and energy. you got to start looking at this as, can these companies really
have any type of growth, do they have any sales. we got to get back to fundamentals here. it's been all technicals for too long. >> thanks, steve. unemployment numbers where it is going to be. that's where everyone's focused in on. the second governor's global climate summit is underway in los angeles. governors, world leaders are coming together again to discuss climate change ahead of the u.n. conference in copenhagen that's coming up in december. joining us, the chairman of the center for climate strategies. he advises governors and others on this issue, thank you for joining us today. you're finding many companies that are finding ways to make money using so-called low-carbon technologies right now. right? >> they sure are. that's one of the key take-aways from this summit here, is that half the delegates are policymakers but the other half are business leaders who are looking to figure out how to capitalize on a lower carbon technology, whether it's things that are obvious like solar
panels and wind, or whether it is things not so obvious like companies that have to measure and monitor what we're doing on carbon in the future. >> is it more about the federal concern than a matter of our state governors? if i'm governor of california and i tap my emissions and washington state doesn't, i really haven't made any improvement at all. isn't this more federal? why are governors even involved in this? >> that's why i was -- i left california two years ago to work with the center for climate strategies to help other states do the same thing because of exactly that concern. the great news is that 33 states have now taken action similar to what they'd do if they were separate countries under the united nations kyoto protocol and have put laws into place and greenhouse gas reduction strategies on ground energy efficiency and renewable energy and all things on display here. even new agreements being signed between those states and other countries. >> does it matter if 33 states have done it and the rest haven't? are we really improving the air? >> well, we are. that represents more than
two-thirds of the economy and i think the big important thing there is first of all, it proves to the federal government that we can do this, that the technology is there, the businesses are there, it won't kill the economy. but secondly, because so many states are doing it, democrats, republicans, it gives the current administration and congress the knowledge that the political will is there to get this through. >> i'm all in favor of states competing. how do you prevent those 33 states that have passed any of those laws from being left competitive vis-a-vis the other states who haven't passed those laws and actually losing jobs to those other states? >> well, first, a lot of jobs can't be moved. there are a lot of things in place. but more importantly what states are finding, and the reason democratic and republican governors are here embracing this, they find it makes their states more competitive. the base of reducing greenhouse gas emissions is about using energy more efficiently. look at what the sears tower, tallest building in north america's doing in chicago where they're cutting their energy use 80% by installing new energy-efficient electrical
devices and insulation and a wind turbine on top of that building. 80% reduction makes them more efficient. >> does the state have to tell them to do it? wouldn't the tower like to have lower bills and they'll do it on their own? >> absolutely. but that's one of the great things about enlightened public policy. if you set some incentives, if you set some programs and mandate to help businesses step up and provide those services that obviously weren't there for 35 years. sears tower was put up in the 1970s and obviously didn't take advantage of these technologies up to then. it is a little push and a little pull that helps everyone get across the finish line. >> thanks for joining us. it is the battle of the broke rajs about rages about to. chally gasparino author of the book "the sellout" which is in book stores next month joins us now. when we play that music --
>> every time -- now i can't do my hit. what's happening with bob mccann? sources are telling me this thing with bank of america, i think they're in contract negotiations, non-compete negotiations. that could be settled today. mr. mccann, former growth management head, head of the brokerage department at merrill lynch. if he gets free, i hear it could be today or tomorrow. these negotiations also tend to break down but i hear they're making progress. if that happens the battle will be between mccann and his old firm. kind of a wall street superstar in our own right, sally fracheck, who now runs a piece of b of a. that's what both sides are preparing for right now. from what i understand, crawcheck is feeling the heat. she knows mccann when he gets
this ubs job -- he's been essentially offered the job. again, negotiations break down. he was offered the entire head of the ubs entire u.s. division from what i understand he does not want to do that. he wants to run the wealth management division but those are details that still need to be worked out. but he's essentially from what i understand got a place to go if he wants it. that's going to set up this battle for brokers, poaching brokers. mccann has his sights on many top producers at merrill lynch. krawcheck knows he's going to go after her. from what i understand, sallie's probably on the phone there. she plans to reach out to former ceos of merrill lynch. merrill lynch is a brokerage department. prior ceos, prior to stan o'neill and john thain, all the ceos for generations were brokers. from what i understand she'll
plan to reach out to these top executives to tell them she is not changing the culture and that she's going to try to bring back the old merrill way even though it is now part of a bank and that's very difficult. mccann, oern, is going to go after those brokers saying they'll never reclaim the path. the closest you'll get is here at ubs. i understand his grand scheme is to somehow if he gets the job, is to how at some point spin it out, rename the brokerage division of ubs the payne webber -- remember? it used to be. it is kind of interesting how we go full circle in all of this stuff. >> that's why i never throw away miniskirts. >> i'm not going there. but from what i understand, that's his grand plan, to spin that out and rename it the payne webber brokerage firm. will be one of the more interesting battles on wall street in the months ahead if things work out the way they look like they're going to work out. >> thank you, charlie. "the sellout" available next month.
would you pay a couple million bucks to mccann to not compete him against you? would you pay him a couple million so he doesn't kill ubs and compete against you if he's that good? >> pay him not to compete? that doesn't happen, does it? >> not on wall street. which companies are standing out front and center when it comes to the business of swine flu. a health care services analyst joins us with his list. also ahead, what are tiger woods' golfing skills worth? how about more than $1 billion? he becomes the first athlete to surpass that mark in career earnings. more on that story coming up. we know why we're here. to build a new generation of airplanes to connect the world. airplanes that fly cleaner and farther on less fuel. and make nonstop travel possible to more places. announcer: around the globe, the people of boeing
right now the dow jones industrial average has given up the green. it was up about 15 points. it's lost a little bit of that. we're now down two points on the trading session. we'll see whether or not we can move back into the green as we go into the close. we talked about it a bit earlier, but swine flu is back in the focus with schools and businesses bracing for another round of the virus. but which companies are front and center when it comes to the battle against h1n1. joining us to talk about what he thinks he might want to look at for your portfolio, art henderson, managing director of health care services research at jefferies. good to see you, art. i found it interesting you're not playing the vaccinemakers. why? >> i think a lot of it's already priced into those stocks. we've talked about this particular issue as far as vaccinemakers for a while. i think it's been priced into most of them. most of them have had nice runs. i'm seeing other opportunities more surrounding the physicians
and the service side than i do in the vaccine side. >> one of them that you like that indeed did a couple of deals today, emergency medical services, ems. why? >> well, they manage emergency departments. one of the things we see particularly in the south where h1n1 is really moving in pretty fast and furiously, particularly over the last few weeks, physicians many times are telling their patients don't come in to the physician's office, we don't want you to infect others that are in here, just stay where you are. i think people who are sick with this are worried and they'll default to going to miniclinics and emergency departments and those are the badle grounds where i think there is some real volume increases that are just around the corner. >> the other two, ipc company and qwest dine nothing tix. >> ipc is a company that manages a patient once they're admitted into the in-patient setting at a hospital.
they see them through admissions through discharge. if there is a mutated strain that forces people in beyond the er -- as you herd, a lot of people are being sent home from the e.r. in good condition. but if that changes, then you're going to see a real demand on that hospital system. dr. newman was on talking about that. but some of the services that surround what goes on inside of a hospital like what itc does is going to be very instrumental in getting people out of that setting. >> last tip was quest. >> quest was an fda-approved test to distinguish between the h1n1 virus and just a typical seasonal virus. if things start to mutate, there may be a greater need for specificity on what we're dealing with here so you could see volumes pick up there as well. >> thank you so much, art. appreciate it very much. >> take care. to the world of sports and money now. he's been making history and money both on and off the course since joining the pga tour in 1996. talking about tiger woods, of course. but apparently "forbes" magazine
assigned somebody to keep track of these things over the years since he turned pro in '96. finally it's come to roost. he won the fedexcup this year which brings with it a bonus of more than $10 million. that put him over the top. with his career earnings on the course, his endorsements, his appearance fees, they say after 13 years he's made more than $1 billion. >> congressional crackdown on executive compensation couldn't be fair behind. >> look what he's done for the sport overall. talk about being worth it. he's completely dominated the game but the ratings when tiger's on versus when he's not, amazing. >> worth it. >> "forbes" says there is only two other people who come close, michael jordan and a guy i don't recognize, michael schumacher, a formula one racer. >> he started in 1991. michael jordan didn't make quite a billion dollar but more than
basketball players typically do. the first billionaire in america. the united states. anyone? >> howard hughes. >> thank you. >> you have that list in front of you. >> i've known that a long time, since the money. >> i would have thought john d. rockefeller was close. he reached $900 million before they dismantled -- >> nominal dollars. in real dollars he is still the richest man in history. >> cornelius vanitier built made like $200 million before he passes on to this children. a new poll shows older workers remain jittery about their finances. we could have told you that without the polls. if you're nearing retirement, is now the time to be in the stock market? a power plan debate is straight ahead. makts dip briefly into the red, then reverse. now we're back in the green. up three points on the dow. back if a minute.
joining us now to discuss the best strategies for retirement, the founder of the bosford group and the founder and ceo of the mutual fund store. adam, start with you. people nearing retirement need a certain a money to retire. what should they do right here? put it into the stock market or should they go into other stuff instead? >> i'm going to have to go with a yes on both of those. >> on the stock market. >> no, i think yes on both. i think that for someone who's in retirement, they need to have stock market exposure. people are living longer, they need to be able to have the growth that comes with the stock market and quite honestly, most retirees today have made their wealth in the stock market and they psychologically want to participate in the market. but, you also need to have some fixed income to protect you against short-term bumps in the market. >> erin, you take a dimmer view of stocks. you talk about two buckets. tell us how does that split between the two buckets. >> yeah, for retirees in
particular, what we feel is the two buckets, lifestyle investments and non-lifestyle. in our opinion, retirees, especially 65 and older, they don't want to go back to work. you need to first focus on your lifestyle and whatever you can invest in to assure that lifestyle, then worry about growth later. >> in that bucket you have no stocks at all basically. right? not even mutual funds. >> no. but within the guaranteed income vehicles, there is a lot of them that do have some market exposure. they just give you some kind of a downside protection. it is not like they're completely void of any up side in the market. >> i wa-- what's a split 50-50? or 90-10? >> it's all based on lifestyle. depends on first if the guy wants $100,000 a year in lifestyle, you put in "x" amount, whatever's left over goes into the non-lifestyle. >> adam, respond to the lifestyle. what you really need are things that throw off cash. so stuff that's got dividends or fixed income, et cetera.
what are you recommending to people who are close to retirement right now and looking for that kind of income? >> well, the reality is that people have been flocking to kind of some of these guaranteed products, annuity products, et cetera, and what we think is that investors don't really need to protect themselves against what their money's going to be worth 20 years from now. they need to protect themselves against a short-term three to five years, let's say, downturns in the market so i think some growth components, and then some fixed income so that you know that -- the worst thing that can happen to you in retirement is that you have to sell things at a time when the market is down, because number one, you're violating the basic rule of investing which is we want to buy low and sell high, and two, when the market comes back you miss out on -- you have less money to come back. >> all right, guys. good discussion. erin, adam, thank you. we'll discuss the markets right after this break. stick around.